Boards of Commissioners Meeting June 27, 2017 www.fresnohousing.org 1331 Fulton Mall, Fresno, California 93721 (559) 443-8400 TTY (800) 735-2929 www.fresnohousing.org 1331 Fulton Mall, Fresno, California 93721 (559) 443-8400 TTY (800) 735-2929 BOARDS OF COMMISSIONERS WORKSHOP 4:00 PM 2 FRESNO HOUSING AUTHORITY COMMISSIONER RETREAT By: Kenneth J. Price 3 Overview • Role of Commissioners • Legal Duties of Commissioners ▫ Governmental duties v. Non-Profit Duties. Duty of Care Duty of Loyalty • Director Liability & Indemnification Issues • Basic Legal Requirements ▫ “Sunshine” Law Compliance 4 The Role of the Governing Board • The right to direct government is the heart of democracy. • Elected/appointed officials are the most important personnel of a local agency. • The next most important group of officers is the appointed management. • The Commissioners and management fulfill fundamentally different roles. 5 The Role of the Governing Board (cont.) • To educate and to be educated by the public. • Setting policy. • Communicate the wishes of the public to the professional staff and the recommendations of the professional staff to the public by adopting agency policy. 6 The Role of the Governing Board • Housing authority commissioners are responsible for: ▫ Providing leadership ▫ Setting policy ▫ Approving budgets ▫ Earning support of the community for day-to-day housing authority programs 7 • Juxtaposed with Authority professional staff: ▫ CEO manages operations and reports to the Boards ▫ Day-to-day management ▫ Hires, supervises, and terminates Authority employees ▫ Carry out the policy of the Boards ▫ Develops and recommends budgetary priorities ▫ Complies with all federal laws and HUD guidelines 8 Best Practices: The Role of an Individual Board Member ▫ Keep confidential matters confidential (Brown Act). ▫ Participate in professional development and commit time and energy to be an informed and effective leader. ▫ Understand the distinctions between Board and staff roles, and refrain from performing management functions that are the responsibility of the CEO and staff (causes issues with Governmental Immunities). ▫ Understand that the authority rests with the entire Board as a whole and not with individuals. ▫ Actively participate in Commission meetings. 9 Bests Practices: Role of Governing Boards During Meetings • Do’s ▫ Know the proposed agenda and review the packet of materials before the meeting. ▫ Know and go by the rules. Comply with Brown Act, Board policies. ▫ Ask for advice from Authority staff and counsel. Try to request information in advance if possible. ▫ Let your CEO (and Tiffany) know in advance if possible when you will miss a meeting. 10 Role of Governing Boards During Meetings • Don'ts ▫ Don’t miss meetings without a reasonable excuse. ▫ Don’t come to meetings unprepared. ▫ Don’t monopolize the meeting. ▫ Don’t deviate from the agenda. ▫ Don’t restrict public or media participation 11 Legal Duties of Commissioners • The role of the “fiduciary”. ▫ What is a fiduciary? ▫ Someone that stands in a position of trust to another person, with corresponding duties. • Fiduciary duties exist in corporate law but the principals can carry to governmental service. • How is a fiduciary supposed to act? ▫ Good faith (state of mind – good intentions& honesty). ▫ Exercise basic duties of good management (objective standard – prudently, fairly, and with care). 12 Legal Duties of Commissioners • Two primary roles: (1) Put the interest of the organization above your own personal interests; and (2) Always exercise prudent business judgment. But, how do we apply each of these roles? 13 Legal Duties of the Commissioners Putting the interest of the organization above your own personal interests • In corporate law, it’s called the “Duty of Loyalty.” • For governmental service, it means following the Political Reform Act and the Gov. Code section 1090. 14 Legal Duties of Commissioners • Rule: Board member may not participate in a decision if that member’s financial interests are affected by the decision. ▫ Can be positive or negative • General Rule: You may not make, participate in, or influence a decision if it may have a reasonably foreseeable financial material impact on you, your immediate family. (Gov. Code section 87100 et seq.) • General Rule: You cannot contract with the agency that you serve. (Gov. Code section 1090 et seq.) 15 Legal Duties of Commissioners Always exercise prudent business judgment. • Under corporate structure, a director must act in a manner that he/she believes (i) is in the best interest of the corporation; and (ii) with such care as an ordinarily prudent person in a like position would use in similar circumstances. In corporate speak, this is known as the “Duty of Care.” • Prudent means with common sense, practical wisdom, and informed judgment. 16 Legal Duties of Commissioners • In a governmental context, how does the Duty of Care work? (1) Must act in best interests of the agency. (2) Must be informed about the decisions you take. (3) Must have an open mind. (4) Must use common sense and reason for the votes you make. (5) Do not exceed the scope of your responsibilities. What if you can’t discharge these responsibilities? 17 Legal Duties of Commissioners • Consequences of violations ▫ Depending upon the violation: Prosecution, fines, disgorgement of profits. • Potential Loss of Governmental Immunities 18 Immunities • Corporations Code has immunities for charitable service. • Government Code has similar immunities. • Statutes protect agencies and their officers and employees for reasons of public policy. • Immunity is created to ensure the risk of liability will not cause agencies to withhold essential services. • Board members are shielded from vicarious liability claims (Gov. Code section 820.0) • Immunities for claims involving public property. 19 Defense of Public Officials - Defense Costs • If an employee’s conduct is within the course and scope of employment and is not fraudulent, corrupt or malicious, the agency must provide for the official’s legal defense. ▫ However, the duty to defend and duty to pay judgments are two different duties. • The Agency is not obligated to indemnify Board members for a lawsuit based upon conduct outside the scope of work or where the Board member is accused of committing fraud. 20 Defense of Public Officials – Judgment • An agency must indemnify from any judgment based on an official act if: ▫ A written request is made at least 10 days prior to trial for the agency to defend; ▫ The agency has conducted the defense; ▫ The officer cooperated with the defense; and ▫ The officer’s actions are within the scope of employment and not fraudulent or there was no misconduct. 21 Defense of Public Officials • When members of the governing board are named as defendants in a lawsuit, the decision to provide a defense and indemnity is complicated by conflicts of interest law. • Officer may participate in the decision to provide a defense when the agency is mandated to provide a defense. ▫ Official may participate in determining whether the lawsuit arises within the official’s course and scope of office. ▫ Officer cannot participate when the agency is not required to provide a defense and indemnity. 22 Transparency Laws Principles: • It’s the public’s business • Public trusts a process it can see 23 Types of Laws • The Ralph M. Brown Act (Government Code Sections 54950, et seq.) • The California Public Records Act 24 Commonality of Transparency Rules • Conduct business in open and publicized meetings • Allow public to participate in meetings • Allow public inspection of records – Public Records Act 25 What is a “Legislative Body” of a Local Agency? • The “governing body of a local agency or any other local body created by state or federal statute.” • A “local agency” is any city, county, school district, municipal corporation, redevelopment agency, district, political subdivision, or other public agency. • Also includes standing committees of a legislative body and certain public and private entities. 26 What is Not a “Legislative Body” under the Brown Act? • A temporary advisory committee composed solely of less than a quorum of the board. This committee must serve a limited or single purpose, is not perpetual, and will be dissolved once its specific task is completed. (Ad Hoc Committee) • Individual decision makers who are not elected or appointed members of a legislative body. 27 Public Meetings • Public agencies must comply with the Brown Act. • From the perspective of the public, the most important law affecting public agencies mandates public meetings. • Although not required, some public agencies also record their meetings. • As such, Commissioners should conduct meetings in a professional manner, and address fellow Commissioners, staff and members of the public in a cordial manner. 28 Agendas & Notices • Posting & Notice Requirements ▫ If the Authority maintains a website, the meeting agenda must be posted online and in compliance with timelines for posting (72 Hours in Advance) • Mailed Upon Written Request • Non-Agenda Items – Brown Act generally prohibits any action or discussion of items not on the posted agenda. There are exceptions. 29 Types of Meetings • Regular meetings – Subject to 72-hour posting requirement • Special meetings – Subject to 24-hour posting requirement & can only discuss discrete items on the agenda • Emergency meetings – limited to meetings held when prompt action is needed due to actual or threatened disruption of public facilities • Adjourned